The Amex Airlines index
ended nearly unchanged with the prior day's close after falling as much as 1.8% and rising up to 0.5% during the course of trading. The benchmark index made a swift fall after the Fed released its monetary policy statement but then clambered back as the broader market rebounded.

The Dow Jones Wilshire Airlines index, which includes more stocks, closed 1.8% higher after also falling back after the 2:15 ET Fed decision.

JetBlue, Northwest

JetBlue Airways
JBLU
fell the most among the major carriers and weighed down the Amex airlines index. Shares closed 3.5% lower at $9.13 after Morgan Stanley analyst William Greene downgraded his rating on the discount carrier to underweight from equal weight and lowered his earnings forecasts.

Greene cited an increased threat from Virgin America in the transcontinental market, where the privately owned airline will make its debut flight on Wednesday.

"We expect increased competition and promotional, introductory fares could have a significant, negative impact," on revenue per available seat mile in JetBlue's transcontinental markets, said Greene.

Northwest shares, which had lost 35% of their value after reaching a high soon after the company came out of bankruptcy May 31, are "oversold," said Greene, which suggests "both near-term and longer-term upside potential."

"The company has a competitive cost structure, a much-repaired balance sheet, and the most favorable labor contracts of any domestic legacy airline," he wrote in a note to investors.

Oil prices finished up 14 cents to $72.20 after dropping as low as $71.14 a barrel in early trading.The September contract has lost over $3 since the close on Friday. See Futures Movers.

The Federal Open Market Committee kept the federal funds rate at 5.25% for the ninth straight meeting and said inflation remains its predominant concern. The Fed acknowledged that risks to growth have increased. After heading lower in the immediate aftermath of the central bank's move, the Dow Jones Industrial Average
DAL, +1.32%
closed up 0.3%. See Market Snapshot.

In other airline news, Air France KLM
DJIA, -0.67%
said Tuesday that it carried over 7.2 million passengers in July, up 4.6% from the same month a year ago. Traffic rose 6.8%, while capacity increased 5.6%. Load factor -- a measure of passengers to available seats -- rose 1 percentage point to 86.2%. The figures confirm the rebound seen in June, the company said.

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